Evening star. [volume] (Washington, D.C.) 1854-1972, 1887-03-12

| ticular Is very much like the ladies. Men viii
thinks OF doing such a thing. Since the hustle in
its present proportions, came into existence, the
In this city has been forcibly demonstrated It is
| however, only a new demonstration OF an old
| truth"
| BUILDING ASSOCIATIONS.
How Money Is Saved and Homes are
| Paid For.
! OVER ONE HUNDRED THOUSAND DOLLARS MONTH
PAID TO BUILDING ASSOCIATIONS IN THIS CITY
MONEY LOANED TO PAY FOR HoUsEs-How TIE
/ MONEY Is PAID BACK, ETC.
The building associations Of Washington serve
to large extent the same purpose as the savings
banks I'm some OF the northern states. The Secre-
tary OF the largest OF these associations not only
In this city but in the United states, speaking to
STAR reporter, estimated that the accumulationS
OF savings In these associations amounted to over
100000 The monthly payments or deposits
amounted, he calculated to about $l25, 900.
There are about forty five associations in the city,
This indicates that there is large class OF thrifty
and saving people In the city. The shareholders
in these associations are, rule clerks or wage
| workers, persons who receive their compensation
| weekly or monthly. Their monthly deposits range
| from one dollar a month to twenty dollars or
more.
SAVING TO BUY HOUSE.
A police officer who receives salary OF $50
month was coming out OF the Office OF q building
| association the other day with his book in his
| hand, when The STAR reporter met him at the
door. Il pay $3.50 a month"; ne said, to the
| reporter 'and j have accumulated quite little
sum as OF money; By-and-by, am going to borrow
pay $1S month for rent. The SIS
pay for rent and the $3.50 l pay into
making any more e efiort than am making now
could pay about $50 q month on house that
w 0u ., INA, nnaliy be my property large propor-
tion doit with the view OF ultimately purchasing or
paying for house by the process which the asso-
citation provides. Others become share holders for
the purpose merely OF saving their money and
having IL earn some interest Tor them The Secre-
tary Of the building association quoted above
| ninety per cent of the loans made by
| the associations were made to persons who OBJ
| house or pay or a mortgage on their home. In
this way he said, the associations aided In build
| ing up the city and helped In creating class OF
| making these loans, he said, they always gave
| preference TO the man who had saved little
| money and wanted to borrow enough more 70 buy
him a home. They would favor such man by al
lowing him the most liberal valuation on his prop
erty so that he could get the largest possible loan
on 1t under the rules OF the association. Next to
him, they would give preference TO the man who
had bought and paid for his home through the as
house as an investment. Lastly they would make
loan to the Spectator who wanted aid in build
Ing three or four houses or 3 row OF houses.
| RATES OF INTEREST.
There has always been considerable discussion
as to the real rate OF interest that borrower from
| building association pays for the use Of money
advanced to him. 1t appears quite plain to most
people, however, that the investor or shareholder
who merely lets his money Accumulate, makes
| eight per cent on his investment, the borrowers
have to pay that eight per cent, and, addition,
many Years ago building sssoeiasiSps as TO wind
up by paying from ten TO sixteen per cent profit to
the shareholder who did not borrow In those days
the associations were run, apparently, almost en-
tirey in the interest OF the nonhorrOw1ng class Of
shareholders, and still the opportunity OF buying
and paving lor property by easy monthly pay.
applications for such advances. The borrower
was allowed little or no advantage. When he re-
ceived an advance on share his dues on that
share became two dollars a month instead of one
dollar. Only one dollar was credited as payment
on the principal OF the debt; the other dollar was
interest Though he was thus constantly decreaS-
ing the principal OF his debt, the monthly interest
he paid never decreased.
IMPROVEMENTS OF RECENT YEARS.
In recent years the plans have been so changed
| as to make such associations mutually beneficial
to each class OF shareholders. The tendency has
been to bring the interest paid down 10 figure
apprOX1mating the current rates OF interest This
Is accomplished by various means In different
soc1atiOns In some the borrower gets the benefit
of accrued profits On his shares Just as the nom
borrower does which In effect reduces the interest
he pays on the loan made to him. In Others reg
ular annual reduction is made every twelve
months In the amount OF his monthly payments.
That the mode OF borrowing money provided by
building associations is popular is shown by the
constant demand made upon them for loans and
advances and the fact that upwards of &, 600 900
ii is argued by building association managers
could not long exist If the rates Of interest paid
greatly exceeded the current rates The rate paid
varies at different times and In different associa-
lions according 10 the demand Tor money.
THE MONTHLY PAYMENT sYsTEX.
The feature OF building associations most attrac
tive TO the borrower is the fact that he obtains his
advances on long time with the privilege of re.
paying in small monthly instaiments, or settling
all or any portion OF the advance whenever he Is
able TO do so. To man, say, who has a salary or
income OF 81 200 year, has accumulated few
hundred dollars, and wants TO borrow 81 600 to
put 10 his own savings TO pay for house, loan
made on ordinary terms at six per cent interest
would be quite appalling. To have to meet. per-
haps. note for $500 every year for four years
would be too great an undertaking for him. In
the building association, however, he can borrow
| this money and pay it back in monthly payments
tnat In some associations do not exceed the rent
he would have to pay 10 occupy such house as he
| than the rent amounts to. Where the monthly
payments are greater, the period during which
these payments are to be made Is shorter. The
rate paid for the use of money will be found to be
about the same In all the welLmanaged building
associations. There is tendency to equilibrium
In building associations such as exists In the
money market at large.
The associations will advance as rule upon
| improved property three-fourths Of the value OF
| the property as appraised by the valuation COM
| miItee AT the outset 1t Is claimed the borrower
| makes considerable saving in the cost of the
legal preminartes, title searching, &C., usual to
such loans, besides having no brokers' commission
/ 10 pay.
l ACASE IN POINT.
| The following is an example given to show how
| a man with 500 might borrow $1,000 and buy a
house for 81 800 cash through one OF the building
associations OF the city. It Is assumed that h5.
oorrowS the money at q premium of 70 Der cent
which, IL Is stated is above the average at which
advances have been made. Ills dues for the firSt
year would be 1882 month, for the second
81. 10 month, and so on, the monthly payments
decreasing Sl.l6 each year until he had paid for
seven Years and three months, when he could
nnally settle with the association by paying Sl4 30
| Then the account Is put down as follows:
Total paid in 81 months. g. $50 Ia
| Cash paid on mousse $4,000
| laxes-- ACKNOWLEDGEMENTS. 262. 80
| lnsudnce- 1900
| bAIance u settle ADVANCE. 14.3O
I Total payments. Observation-Disclosures. $3.50 go
Deduet 81 months rent at S2o.....-...... 2,l15.OO
$1,2l&96
Thusit Is claimed that In 81 months the Dor
rover has paid for his house at an actual cost to
him OF only S1,2ls.96 or S71S.96 In addition the
$500 he had saved 10 begin with. II he had Dor
roWed only u, 600 the amount OF the monthly pay
ments would nave been decreased prOporttOnaly.